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Business, 13.05.2021 22:30 roserose3098

Consider the trade off model by Williamson (1968). Use the model to calculate the percentage cost reductions required to off-set the percentage increases in price for each of the following scenarios: [6 Points] a. Suppose the price increased by 20% due to the merger and the price elasticity of demand equals 0.25 after dropping the minus sign (absolute value), is 0.25.
b. Suppose the price increased by 25% due to the merger and the price elasticity of demand equals 0.25 after dropping the minus sign (absolute value), is 0.25.
Show all calculations to receive full credit. A correct answer not supported with calculations is worth 0.001 points.

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